I wanted to point out a potentially significant structural change in price that developed today before the close.  We have a confirmed Rounded Reversal on the 15-minute chart of the DIA which is setting up confluence support.

DIA 15-min chart:

Rounded Reversals can be significant because they highlight a clean shift in the balance between supply and demand (sellers and buyers).  As such, we have a confirmed up-trend in the 15-minute chart after coming off a positive momentum divergence and breaking above support via the 20 and 50 EMAs, which are now crossing bullishly at the time this chart was captured (1 hour prior to Tuesday’s close).

It’s a counter-trend retracement swing, but it’s important to note that the reversal is coming off the 800 index level low in the S&P 500 which is proving to be formidable support (the chart above is that of the DIA – Dow Jones ETF).  Any bullish short-term bets are off if we break the current support level, and that of $78.50 in the DIA above, but for now, it appears that the short-term structure has shifted to the upside.

To recap:

Price formed a new low late February 2nd on a large positive momentum divergence

Price has broken above both the 20 and 50 period EMAs

The 20 period EMA is currently crossing above the 50 EMA, setting up the ‘confluence cradle’ trade at $80

Price has completed both a higher high and higher low, officially reversing the 15-min trend.

The 3/10 Momentum Oscillator made a new high along with a new price high, suggesting higher prices are yet to come.

Thus, we have confirmed an official “Rounded Reversal” Trend Change.  However, there’s EMA resistance overhead on each of the Daily Charts of the key Indexes, so don’t get too excited yet.

Corey Rosenbloom
Afraid to Trade.com

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